Microsoft today called on the Biden administration to “copy” Australia’s proposal for forcing Google and Facebook to pay news publishers for content that appears on their platforms, describing the approach as one “cure” to funding journalism and protecting democracy.

The tech giant last week waded into the local debate by endorsing the code in Australia and offering to comply with it in the absence of search market leader Google.

Australia’s News Media Bargaining Code is currently being considered by parliament but has principle support of the government and opposition. The proposed media laws would allow news publishers to negotiate payment from Google and Facebook for when news content appears on the platforms.

The proposal has been championed by Australia’s largest media companies as a way of supporting journalism but derided by the tech giants who say it creates unreasonable risk and could undermine the entire internet.

Both parties are far apart on how much value the news content is worth to the platforms and how much that is offset by the traffic the platforms send to news websites and the engagement news content creates on platforms.

In anticipation of this gap, the code includes a “baseball” negotiation system where publishers and platforms submit their best offers to an independent arbiter who chooses the fairest one if deals can’t otherwise be reached.

Google has publicly campaigned against the code, placing warnings on its search page and even threatening to withdraw its search product from the Australian market entirely if the code goes ahead.

Facebook has said it may prevent Australian users from sharing news on its social platforms because of the code.

But the Australian government and competition regulator – which designed the code following a landmark investigation of digital platforms – are so far staring down the threats, with Prime Minister Scott Morrison speaking directly with Microsoft CEO Satya Nadella and president Brad Smith about filling the Google gap.

Microsoft CEO Satya Nadella and president Brad Smith have spoken directly with Australia’s Prime Minister Scott Morrison about filling Google’s void if the market leader leaves the local market. Image:

Microsoft – which claims less than five per cent search market share in Australia – says it is “comfortable” running its search service Bing “at lower economic margins than Google and with more economic returns for the press”.

Microsoft steps in

Last week, Smith confirmed that Microsoft would happily fill the market gap if Google withdraws and comply with the code and offered to transfer Australian small businesses’ advertising from Google to Bing for free.

In a blog post Friday, the Microsoft president went further, calling on the Biden administration to adopt Australia’s proposal in the tech giants’ home. Smith pointed to social media’s impact on discourse and democracy, through the erosion of journalism. The flash point, Smith says, was the January 6th storming of the US Capitol by supporters of former president Donald Trump.    

Smith argues Facebook and Google deserve blame for the incident for both allowing their technology to be weaponised and for siphoning of the advertising revenue needed to support public interest journalism.

“Without new and greater restraints, there is a growing risk that more politicians and advocates will exploit the algorithms and business models underlying social media and the internet to turn disinformation into a new political tactic of choice,” Smoth writes.

“There is another side of this disease, and it’s the erosion of more traditional, independent and professional journalism.”

The “cure”, according to Smith, includes the “innovative” approach by Australia to address the bargaining power imbalances between media companies and tech giants – now the most valuable companies in the world.

“It’s an idea that some governments have pursued in parts of Europe, but with only limited success. The reason is that it’s hard to negotiate with a monopolist. With only one or two whales on one side of a nation’s table and dozens or hundreds of minnows on the other, the result is often a lengthy and expensive negotiation that leaves the minnows short on food.

Smith goes on to explain and argue for the Australian proposal, noting Microsoft’s offer last week to step in for Google forced the search giant to backtrack on its threats to leave the market. 

“Within 24 hours, Google was on the phone with the Prime Minister, saying they didn’t really want to leave the country after all. And the link on Google’s search page with its threat to leave? It disappeared overnight.

“Apparently, competition does make a difference.”

Smith concludes by saying that Australia’s approach is necessary in the US too.

“The United States should not object to a creative Australian proposal that strengthens democracy by requiring tech companies to support a free press.

“It should copy it instead.”

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